India Considers Blocking Cryptocurrency Exchange IP Addresses

In a March 2021 report, Sina Technology said the Indian government was considering blocking the IP addresses of several well-known cryptocurrency exchanges. The reported proposal allowed three to six months before implementation, giving investors time to adjust their cryptocurrency positions.

Before the parliamentary budget session began in February 2021, the Indian government had announced plans for legislation that would prohibit cryptocurrency trading, mining and investment in India. The proposal also gave the Reserve Bank of India authority to develop and launch a central-bank-backed digital currency.

The announcement sent shock waves through India's cryptocurrency community, where digital-asset trading had operated freely for almost a year. India's finance minister later explained that investors would receive a window to close their positions and that the policy would be implemented through a calibrated approach. Even if exchanges and investment platforms were blocked at the IP level, users could still reach websites through virtual private networks (VPNs).

Reports at the time identified two central concerns about cryptocurrency. First, cryptocurrency is global, leaving sovereign governments with limited control over speculation in these assets. Second, it can be used to finance fraud, Ponzi schemes, terrorism and money laundering.

Entrepreneurs in the digital-asset sector argued that a ban would not resolve those concerns and could drive more activity into illegal or black-market channels. Their preferred approach was to regulate exchanges, bring digital-asset investment into goods and services tax and income-tax frameworks, and encourage the blockchain and cryptocurrency industries to develop together.

Originally reported by Sina Technology.